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Enami's Canchero up for sale

Chile's state minerals company has Enami invited bids for its Canchero property in the north of the country.

Bidding rules for the auction will be on sale from June 10-13 at a price of 40,000 pesos (about US$60), the company said in advertisements published in national newspapers. The 4,025ha property is in Taltal, in Region II. Enami did not give further details.

An attempt to sell off the company's Delta copper property flopped late last year when no bids were submitted. An Enami spokesperson told BNamericas the company is reviewing that property but has no immediate plans to put it up for sale again.

Delta, in north-central Chile's Region IV, contains 15Mt of what Enami calls "proven and inferred" reserves of a "very high grade," making the deposit a potentially mid-sized project.

DEBT PROBLEM

Enami has been trying to sell various assets to reduce debts. These include its 10% stakes in Quebrada Blanca and Carmen de Andacollo copper mines in northern Chile, both of which are operated by Toronto-based Aur Resources (TSE: AUR).

The state company is focused on processing copper and operates two smelters and a refinery. It has some US$480mn in debts, US$220mn of which are short term.

The Chilean government is considering transferring its principal asset, the Ventanas smelter and refinery, to state copper corporation Codelco as one way to pay off the debt. Codelco wants to expand the plant to process more concentrates from its nearby Andina division, where it plans to boost output from 250,000t/y to 480,000t. Ventanas, in central Chile's Region V, currently produces some 320,000t/y of electrolytic copper.

Other alternatives being considered are a long-term supply contract with Codelco that would allow Enami to raise fresh resources to at least pay its short-term liabilities.

According to opposition legislator Baldo Prokurica, the treasury should assume US$164mn of Enami's debts directly, as that is the amount the state has demanded in "advanced profits" from the company in the past - earnings Enami never actually posted.

Another US$240mn of the debt went on cleanup programs at Ventanas and its Paipote smelter in northern Chile's Region III.

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Methodology & Procedures

Definitions

Projects covered include state-owned and private projects in the Infrastructure, Electric Power, Oil & Gas (excluding upstream), Water and Waste, and Mining sectors.

Where applicable, a project is considered as such until the end of construction and ramp-up to full capacity (with the exception of mining projects, where the date of commissioning signifies the end of the project). Projects must have a:

Data

For state-owned projects, initial information about the start date and estimates for completion and investment are taken from original signed contracts, along with addendums and annexes.

If original contracts cannot be obtained, information is taken from public documents, presentations, news articles from BNamericas archives, and external sources.

In cases where contracts are subject to approval by legislators, the start date is the date of the law or legislative approval.

In the case of private projects, information is taken from public sources, such as stock exchange filings, annual reports, company presentations, third party research and press releases.

In judging the timing of investment decisions for private projects, great care was taken to differentiate between large projects receiving environmental approval and proceeding directly to construction, and smaller projects where the investment decision hinges on securing financing.

Best care is taken to ensure that recorded data is correct at the time of entry and that each entry is backed with a relevant source.

The greatest care possible was taken to ensure consistency of information in order make a like-for-like comparison in project costs. Insofar as the figures rely on disclosure by the organization or company responsible, the figures can be considered to be conservative in nature.

No attempt was made to adjust figures for inflation during the course of research or for consideration of the time value of money.

Validation

In the case of state-owned projects, validation is carried out where possible with either a member of the consortium, EPC contractor, a relevant state agency or advisors to either party.

Currency

Projects costs are measured in US dollars. Where project costs are measured in a local currency, amounts are converted to US dollars at the date of the relevant announcement, signature or report.

Severity of deviation from original estimates

The severity of deviation from original estimates is defined according to set criteria.

Timing

Status

Condition

Ahead of time

95% of original estimate or below (measured in months)

On time

95% to 105% of original estimate

Minor changes

105% to 120% of original estimate

Medium changes

120% to 160% of original estimate

Major changes

Over 160% of original estimate

Budget

Status

Condition

Ahead of budget

95% of original budget estimate or below

To budget

95% to 105% of original budget estimate

Minor changes

105% to 120% of original budget estimate

Medium changes

120% to 140% of original budget estimate

Major changes

Over 140% of original budget estimate

Changes in Scope

Changes in scope beyond the start date are not accounted for.

Language definitions

Where guidance is non-specific as to dates for completion, the following is used. Project to be completed by 2018 = December 31, 2017 Project to be completed in 2018 = December 31, 2018